Correlation Between Delta Air and Emerson Electric
Can any of the company-specific risk be diversified away by investing in both Delta Air and Emerson Electric at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Delta Air and Emerson Electric into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Delta Air Lines and Emerson Electric Co, you can compare the effects of market volatilities on Delta Air and Emerson Electric and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Delta Air with a short position of Emerson Electric. Check out your portfolio center. Please also check ongoing floating volatility patterns of Delta Air and Emerson Electric.
Diversification Opportunities for Delta Air and Emerson Electric
0.56 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Delta and Emerson is 0.56. Overlapping area represents the amount of risk that can be diversified away by holding Delta Air Lines and Emerson Electric Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Emerson Electric and Delta Air is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Delta Air Lines are associated (or correlated) with Emerson Electric. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Emerson Electric has no effect on the direction of Delta Air i.e., Delta Air and Emerson Electric go up and down completely randomly.
Pair Corralation between Delta Air and Emerson Electric
Assuming the 90 days trading horizon Delta Air Lines is expected to generate 1.59 times more return on investment than Emerson Electric. However, Delta Air is 1.59 times more volatile than Emerson Electric Co. It trades about 0.08 of its potential returns per unit of risk. Emerson Electric Co is currently generating about 0.03 per unit of risk. If you would invest 67,144 in Delta Air Lines on September 5, 2024 and sell it today you would earn a total of 61,815 from holding Delta Air Lines or generate 92.06% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 99.8% |
| Values | Daily Returns |
Delta Air Lines vs. Emerson Electric Co
Performance |
| Timeline |
| Delta Air Lines |
| Emerson Electric |
Delta Air and Emerson Electric Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Delta Air and Emerson Electric
The main advantage of trading using opposite Delta Air and Emerson Electric positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Delta Air position performs unexpectedly, Emerson Electric can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Emerson Electric will offset losses from the drop in Emerson Electric's long position.| Delta Air vs. GMxico Transportes SAB | Delta Air vs. Ross Stores | Delta Air vs. Monster Beverage Corp | Delta Air vs. Genworth Financial |
| Emerson Electric vs. Micron Technology | Emerson Electric vs. Grupo Carso SAB | Emerson Electric vs. Delta Air Lines | Emerson Electric vs. Monster Beverage Corp |
Check out your portfolio center.Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Commodity Directory module to find actively traded commodities issued by global exchanges.
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